Asian Shares Up, Australia Held Back By Floods

ColinNg

SINGAPORE -- Asian stock markets were higher Tuesday though the Sydney market was dragged by the devastating floods in the state of Queensland.

Wall Street's strong start for 2011 set the tone for Asian markets. The Dow Jones Industrial Average rose 0.8% Monday to hit two-year highs, as improved manufacturing and construction data boosted investors' outlook for the economy.

It "looks like risk is coming back on" with the U.S. dollar declining while the commodities price index strengthens," said Phillip Securities in a note to clients. "(It) suffices to say our market view for stocks...remains positive," the Singapore-based house added.

The Australian stock market started the new year on a positive note in thin trade, as investors returned from their long weekend, but the market quickly trimmed gains.

The market was dragged by insurance providers, as investors were concerned about the impact of the floods, as floodwaters continue to rise in parts of Queensland, and with more rain forecast in some areas of the state in coming days.

The full extent of damage caused by the floods, described by Queensland Treasurer Andrew Fraser as being "of biblical proportions", and cost to insurers is unlikely to be known until the floodwaters start to recede.

Bell Potter Senior Client Adviser Stuart Smith said the market had not yet recognized the scale of the floods and the likely level of claims. "I don't think it has sunk in at all," he said.

Insurance Australia Group was down 2.8% and QBE Insurance Group was down 2.1%. Suncorp which was trading down 2.9% at A$8.36 on a deferred settlement basis, said it has so far received under 2,000 claims since Christmas Eve.

The Shanghai market started the year higher and was "gaining support from other Asian markets" rise on Monday, (and) the continued strength in the resources sector, such as coal miners and metal firms, due to expectations of higher oil and metal prices," said Zhang Gang, an analyst at Zhongyuan Securities.

Coal miners were leading the gainers with Jizhong Energy Resources up by its 10% daily limit at CNY44.06, while Guizhou Panjiang Refined Coal jumped 8.6%. Metal plays were also strong with Yunnan Copper up 5.5% and Jiangxi Copper 4.9% higher.

Japanese stocks were also led higher by resources-related stocks after strength in crude oil prices Monday.

Inpex was up 4.2% and Japan Petroleum Exploration rose 3.7%.

The buying was also due to short-covering after the market's decline in its last trading day of 2010, said Yumi Nishimura, the deputy general manager at Daiwa Securities Capital Markets. The "buying won't go beyond that (short-covering), so 10,400 would be a tough level to crack," she said.

The Korean stock markets was supported by brokerage and shipbuilding sector stocks.

Brokerages were rallying on hopes for stronger trading volumes after the benchmark index hit a record closing high on Monday; Daewoo Securities was up 0.9% and Samsung Securities gained 0.9%.

Large shipbuilders were up on hopes for new orders this year, after their recent weakness. Samsung Heavy Industries was up 0.8% and Daewoo Shipbuilding & Marine Engineering added 2.2%.

Hyundai Heavy Industries rose 2.9% after it said it's won a KRW590 billion order to build a drill ship in the U.S.

The Hong Kong market extended its winning streak to five sessions with property landlords leading the gainers on expectations of higher rental income in 2011. Wharf gained 2.7% and Hysan rose 3.2%.

"Optimism will continue to be underpinned by the outlook for an appreciating renminbi and a low level of real interest rates, which are in fact negative in both Hong Kong and the mainland," said Haitong Securities in a research note.

Elsewhere in the region, Philippine shares were flat, Malaysian shares gained 0.7%, while Singapore's Straits Times Index was up 0.6% and Thai shares gained 0.9%. New Zealand markets are shut.

In the foreign exchange market, the major currency pairs traded in tight ranges in thin trade.

The U.S. dollar was at Y81.84 against the yen, from Y81.73 in late New York trade on Monday, while the euro was at $1.3352 against the dollar, from $1.3353 and at Y109.29, from Y109.17.

Lead March Japanese government bond futures were down 0.13 at 140.48 points, weighed by the strong Tokyo stock market. The yield on the key 10-year cash JGB was up 2.5 basis points at 1.145%.

Spot gold was at $1,414.20 per troy ounce, down 40 cents from its New York settlement Monday. With gold near its all time record high, the risk remains for a move toward $1,500, said ScotiaMocatta. "It would take a failure at $1,430 to cool some of the bullish sentiment in the metal," it added.

February Nymex crude oil futures were down 10 cents at $91.45 per barrel.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.